Soglia and Soglia (No. 3)

[2018] FamCA 997

FAMILY COURT OF AUSTRALIA

SOGLIA & SOGLIA (NO. 3) [2018] FamCA 997

FAMILY LAW – COSTS – where the Respondent made an Application for costs thrown away by the adjournment of the trial on an indemnity basis, or if unsuccessful, on a standard basis – where costs ordered on a party basis – where costs to be paid within 30 days of the making of a final order in the proceedings between the parties or final resolution by other means.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
D v D Costs (No. 2) (2010) FLC 93-435
In the Marriage of Kohan (1993) FLC 92-340
Limousin v Limousin (Costs) (2007) 38 Fam LR 478
Yunghanns v Yunghanns (2000) FLC ¶93-029

APPLICANT: Ms Soglia

RESPONDENT: Mr Soglia

FILE NUMBER: SYC 8323 of 2015

DATE DELIVERED: 27 November 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Hogan J

HEARING DATE: 11 September 2018 and determined in Chambers following the receipt of written submissions filed: 26 September 2018 and 19 October 2018

REPRESENTATION

THE APPLICANT: Self-represented on 11 September 2018

COUNSEL FOR THE APPLICANT Ms Friedlander by way of written submissions filed 26 September 2018

COUNSEL FOR THE RESPONDENT: Mr O'Connor on 11 September 2018 and by way of written submissions filed 19 October 2018

SOLICITOR FOR THE RESPONDENT: Redmond Hale Simpson

Orders

IT IS ORDERED THAT

1. The Applicant pay the Respondent’s costs thrown away by the adjournment of the trial listed to commence on 10 September 2018, with such costs:

   (a)to be in an amount as agreed between the parties, as assessed on a party and party basis in accordance with Schedule 3 to the Family Law Rules 2004 (Cth), or, failing agreement as to amount, to be in the amount assessed on a party and party basis in accordance with Schedule 3 to the Family Law Rules 2004 (Cth); and

   (b)       to be paid within 30 days of either:

   (i)the making of a final order in the proceedings between the parties; or

   (ii)the final resolution, by other means, of the proceedings between the parties.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Soglia & Soglia (No. 3) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 8323 of 2015

Ms Soglia

Applicant

And

Mr Soglia

Respondent

REASONS FOR JUDGMENT

1. This matter was listed to commence on 10 September 2018 for a two day trial. On the first day of trial, the Applicant filed an Application in a Case seeking an adjournment of the trial. This Application was dismissed and I granted Counsel for the Applicant leave to withdraw from the balance of the proceedings. The Applicant’s legal representative, Mr Moylan, then advised the Court his instructions had been terminated and he was granted leave to withdraw from the balance of the proceedings. The Applicant, who then appeared in person on her own behalf (with the assistance of an interpreter), made an Application for an adjournment of the hearing. This Application was successful and, on 10 September 2018, I adjourned the proceedings to a date to be advised.

2. On 11 September 2018, Counsel for the Respondent made submissions in support of the oral Application that the Applicant pay his client’s costs thrown away by the adjournment, on an indemnity basis or, if that primary position was unsuccessful, on a standard basis.

3. At the conclusion of hearing these oral submissions, I made Orders to enable the Applicant to respond to the oral Application for an order for costs. She was accorded the opportunity to file and serve an affidavit if she wanted to rely on the same in meeting the Application for costs; she was also directed to file and serve any written submissions she wished to make in response to the submissions made by Counsel for the Respondent.

4. The Respondent was then given the right of reply via the ability to file written submissions strictly in reply to those filed by the Applicant.

The Respondent’s Application for costs

1. The Respondent seeks costs on an indemnity basis in a fixed amount, as outlined in the affidavit of Mr E.[1] The quantum sought is $27,181.14 (the payment of which, pursuant to order, was described as a “fixed price costs order” by Counsel for the Respondent). These costs include those associated with the preparation of the proceedings, as follows:

   a)Counsel’s fees for preparation: $10,500.00 (excluding GST);

   b)Redmond Hale Simpson billable work in progress for the preparation of hearing and day one of the hearing (for the period 28 August 2018 to the date of the hearing for costs): $7,620.00 (excluding GST);

   c)Redmond Hale Simpson unbilled disbursements: $1,041.14 (excluding GST).

   [1] Filed 11 September 2018.

2. In addition, the Respondent deposes that the following amounts were costs thrown away by the adjournment:

   a)Counsel fees fixed for two days: $7,000.00 (excluding GST);

   b)Solicitors fees: $1,020.00 (excluding GST).

3. The Applicant opposes the making of an order for costs on an indemnity basis.

Do the circumstances justify the making of an order as to costs as sought by the Respondent?

1. Section 117(1) of the Family Law Act 1975 (Cth) (the Act) provides that each party to proceedings under the Act shall bear his or her own costs. However, if the Court is satisfied there are circumstances which justify it, the Court may make such order as to costs as it considers just.[2]

   [2] Section 117(2) Family Law Act 1975 (Cth).

2. In considering what order, if any, as to costs should be made, the Court must have regard to the matters set out in s 117(2A) of the Act.

3. Neither party was in receipt of Legal Aid at the time the Application was heard. Even if a party’s financial circumstances are poor, impecuniosity, of itself, is no bar to an order for costs being made where it is otherwise warranted.[3]

   [3] See, for example, D v D (Costs) (No 2) (2010) FLC 93-435.

4. The Applicant is currently unemployed. She is supported financially by her daughter and has incurred borrowings by way of credit card facilities to meet expenses. Her current indebtedness via credit card facilities is in the amount of $117,000.00. She is the owner of real property located at Suburb F (to which she accords a value of $2,000,000.00 and in respect of which there appears to be borrowings in an amount of $44,000.00 secured by mortgage), two units in Iran (to which she accords a total value of $70,000.00), $3,000.00 at bank and a motor vehicle (to which she accords a value of $35,000.00). She has no entitlement to superannuation and deposes to a tax lability in the amount of $5,000.00.[4]

   [4] Applicant’s Financial Statement filed 26 September 2018.

5. In contrast, the Respondent’s financial situation is such that he has a nett worth at, or in excess of, about $6,000,000.00.

6. Whilst the submissions made on behalf of the Applicant contain assertions that her former legal representative should be held accountable for the failure either to tell the Court, when the Court proposed its listing, that the matter was not ready to proceed or to ensure that it was in fact ready to proceed on the days allocated to it for hearing (given the length of time since the Applicant commenced the proceedings), no formal application has been filed seeking an order that he pay the costs himself: consequently, he has not been afforded the necessary opportunity to be heard in relation to the same. Whether the Applicant ultimately determines to take such a step is entirely a matter for her.

7. I note also that, quite properly, the Applicant conceded that her successful Application for adjournment resulted in a loss of time to the Court (in the sense that other matters which are waiting to be determined could have been heard instead) and to the Respondent.

8. Having taken into account the submissions made on behalf of each party and having had regard to those matters to which regard must be had, I am persuaded that the circumstances justify the making of an order that the Applicant pay the Respondent’s costs thrown away by the adjournment of the trial. Such costs do not, in my view, extend to the costs of and incidental to the Application for costs, which was made on the second day of the time allocated for the two day trial.

9. Whatever may have been the case vis-à-vis the Applicant and her then legal representative, the reality for the Respondent is that he was put to the cost of preparing for and appearing at the trial on the days on which it was listed.

On what basis should the Applicant be ordered to pay the costs?

1. As noted above, there is evidence about the Respondent’s actual costs and thus the amount the Applicant would be required to pay if an order for the costs thrown away by the adjournment was made on an indemnity basis. There is no evidence, however, to identify the amount by which such figure exceeds that which the Applicant would be required to pay if costs were ordered on a party and party basis.

2. Further, even if an order for costs was made on an indemnity basis, the Applicant’s liability is limited to those costs which have been reasonably incurred and which can be demonstrated to have been thrown away by the adjournment of the trial. Issue is certainly taken, in the written submissions prepared on the Applicant’s behalf with the reasonableness of some of the costs sought and/or as to whether they were necessarily incurred.

3. Unless there are exceptional circumstances, an order for costs should be made on a party and party basis: see D v D Costs (No. 2) (2010) FLC 93-435 in which the Full Court reviewed extensively earlier authorities, including Limousin v Limousin (Costs) (2007) 38 Fam LR 478 and In the Marriage of Kohan (1993) FLC 92-340, and also Sheppard J’s decision in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.

4. In Colgate-Palmolive Co v Cussons Pty Ltd, [5] Sheppard J summarised that:

   …

   2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis...

   3. This has been the settled practice for centuries in England.  It is a practice that is entrenched in Australia.  Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it...

   4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course...

   [5] (1993) 46 FCR 225 at 232 - 233.

5. His Honour later noted some of the circumstances regarded as warranting the exercise of the discretion to award costs on an indemnity basis, saying at 233 - 234:

   Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)).  Other categories of cases are to be found in the reports.  Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis.  The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

6. In Yunghanns v Yunghanns[6] the Full Court specifically acknowledged the “category” of cases that may give rise to an indemnity order is not closed:

   It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some `particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis': per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.

   [6] (2000) FLC ¶93-029 at 87,471.

7. I am not persuaded that the facts and circumstances of the present case are such as to warrant the making of an order for the payment of costs other than on a party and party basis: therefore, I decline to make an order that the Applicant pay the Respondent’s costs thrown away by the adjournment on an indemnity basis.

8. In the broad exercise of discretion afforded to Judges at first instance when disposing of applications for costs, I have also determined that the order which is just as between the parties, in the circumstances of this case, is that which obliges the Applicant to pay the Respondent the ordered costs – calculated on  a party and party basis in an amount agreed or, failing agreement, as assessed on a party and party basis – after the finalisation of the proceedings between them because it is only then, in my view, that a proper assessment of the quantum of the same can be arrived at – for example, the quantum of the costs thrown away which it may be reasonable to allow will depend on whether the Respondent’s  Counsel at the final hearing is Counsel who appeared on his behalf before me or not.

9. For these reasons, then, I consider that the orders outlined at the commencement of these Reasons are just.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 27 November 2018.

Associate: 

Date:              27 November 2018